Italy faces serious economic and political challenges as it attempts to navigate its way through the global recession. Despite this, the country's installation sector is by no means awash with doom and gloom. David Davies finds out what is encouraging this optimism.
Italy's historic social and economic problems are being accentuated by the current economic downturn, with major implications for the entire business community.
High unemployment, poor economic growth and low incomes are just a few of the issues that have confronted Italy's 60-plus governments since the end of World War II. Different administrations have achieved various levels of success in tackling these issues, but it would be fair to say that the past three years have witnessed the emergence of a distinctly downward trajectory.
In recent times, the country's economic growth rate has never exceeded a peak of 3.7% (2000) and has generally been among the lowest in Europe. But now there is greater cause for concern: the Organisation for Economic Co-operation and Development (OECD) predicted in late June that GDP would drop by 5.5% this year, with only a modest improvement (+0.4%) predicted for next year. Meanwhile, the country's already-significant debt burden is expected to rise substantially as the year progresses.
In keeping with the trend of contemporary Italian history, the current government is a coalition administration presided over by prime minister Silvio Berlusconi. Now the longest-serving leader of a G8 country, with three terms as PM to his credit, Berlusconi is pressing forward with a package of reforms intended to stabilise and expand the faltering economy.
It is too soon to evaluate the success or otherwise of these measures, although Italians in search of some temporary distraction can always turn to the seemingly never-ending media speculation about Berlusconi's life. A highly controversial figure after more than four decades in the public eye, he is at least unlikely ever to be accused of being dull.
Install market portrait
Away from the saga of Silvio, however, it is clear that the Italian economy is facing a period of serious difficulties comparable with those being experienced in many other Western European countries. In the installation business, this is manifesting itself in a greater inclination towards delaying projects or reducing their scope. However, there is a general feeling that conditions will begin to improve towards the end of this year, or early next.
Alessandra Giorgi, general manager of Tavullia-based lighting equipment and lighting console manufacturer SGM, is undoubtedly among the most optimistic of our respondents. "The Italian professional installation business as it concerns SGM is in good health. SGM is constantly supplying fixtures selected from its LED colorchanger catalogue for a wide variety of installation projects," she says.
Elsewhere, however, there is a widespread belief that the economic situation is working to the detriment of the Italian installation sector.
"We notice that some projects are cancelled, while some are realised with a limited budget," says Guido Mazzoli, international sales manager of Udine-based professional and home theatre screen manufacturer Euroscreen. "We observed from the beginning of 2009 a significant downturn in the Italian professional AV business mainly caused by [budget cuts]. We foresee a recovery in this situation by the middle of 2010."
"I would say that the [economic downturn] has had a big impact on the installation business, to the extent that it is probably 30% down on last year," says Luca Giorgi, sales director at Florence-based professional amplifier manufacturer Powersoft. "The decline has happened not because there are no projects, but because they are being postponed and so on. People are waiting as much as they can; they're inclined to use the equipment they have already or wait until the climate improves."
Encouragingly, Luca Giorgi says that there are already "some signs of recovery. This started to become apparent during the second half of May. We believe that the end of this year will be better in terms of business development for both the install and live markets."
Michele Palladino - sales manager of the AVL Systems Division at Teramo-based audio, video and lighting manufacturer Proel Group - highlights the impact that the global crisis has had on the Italian installation business after several years of sustained expansion.
"In the past few years, the installation business in Italy has been seeing a trend of steady growth," confirms Palladino. "Undoubtedly, this global crisis has affected the development of this market too, and in Italy it hit the largest companies."
Proel, however, says that it actually expects its business in the install market to increase during 2009, and predicts that the overall sector will begin to evince signs of recovery during the latter stages of the year.
"We expect the market to pick up its growth in the fourth quarter," says Palladino. "Generally speaking, we can expect 2009 to show results similar to previous years, and the market to start growing again next year. For what pertains to Proel, though, the results should be a little better, as the installation market is just now developing, and we expect to show a 10-15% growth over 2008 by the end of this year."
Flavio Naggi, overseas sales manager for Milan-based loudspeaker component manufacturer FaitalPRO, also strikes an upbeat tone. Part of the long-established Faital Group, FaitalPRO has been targeting pro-audio customers worldwide for just over three years, and as such the company is a relatively new force in a highly competitive sector. However, Naggi says that the family-run manufacturer is experiencing growing demand for its pro-audio products, particularly in the US, and is hopeful of expansion in France, Germany and several other countries.
The Italian install market does not currently represent a major share of FaitalPRO's sales, but Naggi observes that domestic market conditions are beginning to improve. "Who knows if it is just a moment or actually a trend, but the market is currently in a better situation than it was a few months back," he says.
Like many others who have spoken to IE recently for market focus features, Naggi mentions the contribution to be made by financial organisations in ensuring a rapid recovery. "The banks are lending more than they were a few months ago, but not as much as they should be, given the measures our government has taken to help them out," he says, noting that Faital's status as a well-financed family-owned company has enabled it to steer a trouble-free course through recent events.
Foundations for growth
Assuming, then, that some form of recovery does take place towards the end of this year or early next, how are our featured companies planning to make the most of the improved circumstances? Encouragingly, they are clearly not short of ideas.
Proel, for example, is set to consolidate its presence across the pro-AV world with the introduction of a new division, Proel Group Professional. The new operation will include a wealth of pro-oriented products, including those belonging to the Sagitter brand, which Proel acquired from Lampo Lighting Designers earlier this year.
"The objective [of the new division] is to ensure maximum effectiveness of the group in this sector and the ability to support any requirements from our customers," explains Palladino. "In this way, Proel will further increase service levels, improve the communication flow and reduce response times - all critical factors in continuing to improve the service levels we offer our customers."
In terms of the install market specifically, Proel's AVL Systems Division will continue to specialise in the sale of audio, video and lighting systems for installations, and in their design for public and private applications. Recent developments include a new line of evacuation systems designed to comply with EN60849/BS832 and featuring three centralised control systems that can "satisfy the widest variety of requirements".
With regard to its current install market objectives, Palladino says that Proel is "concentrating on multi-zone audio systems and, even more, on emergency/evacuation systems in compliance with existing laws. Proel is expecting a major growth in the evacuation system segment as installation of this equipment will soon be required by law. Proel works side by side with the designers and, thanks to this collaboration, has verified a growing demand in this field."
Powersoft, meanwhile, is hopeful of further growth across the install market and particularly in areas where customers are seeking energy-efficient solutions.
"Historically, the strongest areas for Powersoft in the install business have been big venues such as stadiums and airports where the green aspects of our products can be a key selling point, or small venues, where the high-tech or aesthetic aspects of our brands can be the main attractions," says Luca Giorgi. He also envisages a "trend for smaller, multipurpose venues that, for example, incorporate a restaurant, a bar and a lounge. I think that area will be a bit more profitable and more active in the current economic situation, so this is where I see the market moving again."
Powersoft already has an extensive selection of products that have proven popular with installation customers - not least the K3 digital amplification system with optional DSP - but this is now set to grow significantly with the launch of the first two products in the company's new Installation Series. Premiered at Prolight + Sound earlier this year, the Duecanali5204 and Duecanali3904 offer a maximum output of 1,400W and 1,000W, respectively, and are said to deliver an "efficient and reliable energy-saving design" in a one-rack unit space. The new products are set to be made available towards the end of this year, or early next.
SGM is continuing to promote its range of lighting solutions for both indoor and outdoor applications, including the colorchanger LED line and the new Dotto Line of mini-spot LED fixtures. "Customers want reliability, high power and excellent performance," says Alessandra Giorgi. "In terms of applications, LED installations on public buildings will generate the greatest growth for SGM [as they require] high power output and low power consumption."
Meanwhile, Euroscreen expects continuing demand from projects involving new or refurbished auditoria, theatres and large meeting facilities. "We see potential growth for large AV installations in the private sector," notes Mazzoli, adding that Italian install customers continue to focus on satisfying key system requirements and ensuring value for money.
Return of the sweet life?
So while the Italian installation market is clearly not immune to the effects of the economic downturn currently besetting so many European nations, it is clear that the country's audiovisual manufacturers have plenty of ideas at the ready that are likely to help ensure the resurgence and further growth of the business.
UK Trade & Investment - the British government organisation that helps UK-based companies "succeed in an increasingly global economy" - is among the industry bodies taking a positive line. "Although the global downturn has meant a fall in growth for both the UK and Italy, we remain optimistic that economic activity will begin to recover before the end of 2009," a UKTI spokesperson tells IE. "Italy is one of the UK's largest markets with exports of goods worth around £9.2 billion in 2008. Demand for high-quality British consumer goods in Italy is huge, so UK companies in the technological and creative industry have real opportunities to export."
For sure, la dolce vita (the sweet life) may have come under a little pressure of late, but it is by no means an outdated notion. Indeed, for the installation business, the good times may return sooner than expected.